FX’s John Landgraf Sounds Alarm About ‘Lost’ Ad Revenue

Cabler is mounting big push behind FXNow authenticated service to capture more viewing

The biggest challenge facing the cable TV biz at present is advertising revenue lost to delayed viewing on a variety of platforms — which is why FX is mounting a big push behind the rollout of its FXNow authenticated service.

Speaking at FX’s Television Critics Assn. session on Tuesday, Landgraf said network brass estimate the cabler is losing as much as 40% of its ad sales revenue “on some of our most valuable series,” he said. He cited an average 5 million-viewer lift for “Sons of Anarchy” via delayed viewing — significant amounts of which come after the three-day window that is factored into advertising deals at present.

“We need to find new opportunities to mitigate those losses,” he said. FXNow, which offers ad-supported on demand access to most of FX Networks’ cablers programming, “will allow us to begin rebuilding our advertising business,” Landgraf said.

Landgraf also touched on a hot-button issue this pilot season: stacking rights, or the ability of a network to make all current-season episodes of a series available on VOD, SVOD or authenticated streaming. Control of these rights is brewing as a major battle between nets and studios.

Landgraf acknowledged that the stacking situation has led to a “tug of war” with some suppliers, but called it “absolutely vital to the health of our service.”

FXNow is available via MVPDs in about 50% of U.S. TV households. Landgraf detailed the complexity behind launching the service with so many partners, all of which have their own proprietary systems , and they control the direct relationship with subscribers.

There are also intricacies to work out in terms of how ads are inserted and measured, who controls the programming environment around the site — a host of tricky issues that take time to work out. Landgraf noted that the omnibus carriage agreement that Fox cut with Comacast lasts year runs more than 100 pages, much of it devoted to spelling out the new rules of the road for non-linear services.

“People have been talking about the promise of (authenticated) TV Everywhere for a long time now,” Landgraf said. “It’s been a jerky-jerky process but I’m confident that the industry has achieved the key breakthrough. I think a year or two from now people will really have access to a lot of content” using authenticated services, he said.

In characteristically erudite fashion, Landgraf added: “We are just watching the difficult throes of an eco-system in the process of evolution.”

With advertising models in flux, Landgraf also noted that it has become increasingly important for FX Networks to own the content it carries — something made possible by the ramp up of its FX Prods. unit during the past few years.

“Ownership of content has bailed us out” at times when ad markets were shaky, he said. “It’s a nice thing to have long-tail revenue (from content) that undergirds a more volatile thing like advertising sales.”

Moving to less heady topics, Landgraf admitted that he would have liked to see “Justified” go on longer that one more season (it’s upcoming 6th edition) but he respected the call of exec producer Graham Yost and star Timothy Olyphant on the time to end the story.

“They felt the arc of the show would be best serviced by six seasons,” he said.

Landgraf was asked about FX’s reputation for giving its series creators (mostly) carte blanche to produce their shows. Landgraf said he’d learned from experience that it was better to stick with the creator’s vision rather than steering it another way, even at the expense of narrowing the show’s appeal.

The philosophy is: “make it really good for somebody, not pretty good for everybody,” he said.

Landgraf also did his duty as a programming exec, talking up the slate of new series on deck for the coming year. Limited series “Fargo” has “filled the snowshoes” of the original 1996 feature, he promised.

If they want more money they should allow people to pay for a la carte tv. I would be willing to pay $20 for all the ESPN channels and I bet they could get more than ESPN got from me when I had Directv.

I’m also ok with some adds in my stream like Hulu Plus. Its just the idea that you have to pay $100 for 200 channels when you only want to watch maybe 20 of the channels that is forcing people way from cable and satellite.

I am in Denmark, and enjoy HBONordic and Netflix, but would probably be interested in FXNow too, if it became avaliable as an App. To me this is the future, not the forced cable version you have in the US. Every network for themselves at 5-10$ per app per month.

I “cut the cord” after my DirecTV bill hit $100 a month. I’m willing to watch unskippable commercials on Hulu Plus or other streaming services as long as I’m not required to also have cable or satellite. I’m even willing to pay for a season pass on a series-by-series basis.

But if all of those options are taken away from me in some misguided attempt to force me to pay for 900 channels of programming I don’t want, I’m perfectly willing to turn to BitTorrent.

The technology you want to distribute your product is killing that goose with that egg. The TV Cable industry and the rest of the content creators are on the squirrel treadmill which is slowing down to throw off you squirrels.